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It is a paradoxical situation in the Indian wind power industry today.
There are chances of two key incentives being brought back (after a recent meeting of officials of the Ministries of New and Renewable Energy and Finance).
Investors are willing to put up projects, as evidenced by robust order books of major wind turbine manufacturers. And yet, the mood in the industry is sullen.
Better Order books
Nobody seems to expect the current financial year to be any better than last year, when wind power installations fell to 1.7 GW from 3.2 GW in the previous year.
A meeting that took place between officials of the Ministry of Finance and of the Ministry of New and Renewable Energy has created expectations that two key incentives — generation-based incentive (GBI) and accelerated depreciation (AD) — are just about to be pencilled back in.
The GBI was promised in the last Union Budget, but informed sources say that chances are bring that that AD would also come.
These incentives were removed from April last year.
Sources said the renewables ministry impressed upon their counterparts in finance that GBI and AD would get two different sets of investors.
The GBI, a generation-based payment, is sought by companies that take generation of electricity as their business.
The AD is used by investors who have other businesses — they put up windmills for saving on tax.
The current year is looking better in terms of orders. Gamesa has orders worth over 1,000 MW, of which 647 MW would be executed in the current year, compared with just 99 MW last year.
Regen Powertech says it has 663 MW worth of orders to be executed this year, compared with 273 MW last year.
Inox Wind did 264 MW last year, but the company has orders for 500 MW this year.
The orders of just these three companies add up to more than the total wind installations in India last year.
Industry unhappy
However, industry experts doubt if these orders will translate into actual projects. “I don’t think so,” said U.B. Reddy, Secretary, Wind Independent Power Producers’ Association, when asked if he thought the current year was better than the last.
Reddy observes that there are too many other negatives — each State has its own problem.
Tamil Nadu, the windiest State, has the persistent problem of lack of evacuation infrastructure; in Maharashtra and Gujarat Power Purchase Agreements are not getting signed (Maharashtra because the buying utility wants to bring in competitive bidding and Gujarat because it is surplus in power, and hence, not keen on wind); in Rajasthan the industry and the State are battling over ‘competitive bidding’.
Thus, you have a situation where the investors are willing, the financiers have no issues (unlike, say, in the case of solar energy), the federal financial incentives are a signature away, and yet the going is tough.
“Orders are there, but customers are waiting for some policy clarity,” says Devansh Jain, Director, Inox Wind Ltd.
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